Amrita Narlikar on Doha, the WTO, and the Politics of Poverty

In this podcast edition of Foreign Affairs Unedited, author Amrita Narlikar discusses Doha, the WTO, and her recent article "The Power of the Powerless," with Foreign Affairs Deputy Web Editor Rebecca Chao. This interview has been edited and condensed. A rush transcript is below.

CHAO: Can you tell us about how you came to cover this topic of Doha? And also, the background on how you came to write this paper, "The Power of the Powerless?"

NARLIKAR: One of the areas I work are trade negotiations. And I’ve been following developments of the DDA, of course, for -- since the time it was launched. And I have also studied the GATT and the WTO.

In the past, a lot of developing countries used to call the GATT -- the General Agreement on Tariffs and Trade, a predecessor of the WTO -- the "rich man's club." And they would complain of marginalization, about how they were the rule takers, that it was very difficult for them to get their agenda onto the GATT and indeed in the early years of the WTO, too.

And now the WTO has emerged as one of the very few international organizations that has actually been responsive to the change in the balance of power. So, unlike the IMF, which is taking an awfully long time to reform and to align its voting system in keeping with the changing power balance, in the case of the WTO, Brazil, and India, and China are now at the high table of negotiations.

CHAO: That's interesting.

NARLIKAR: And because these countries work quite closely with the least developed countries too, and other developing countries, this is a very -- this is, relatively speaking, a very equitable organization. And yet, paradoxically, instead of seeing more ownership, more legitimacy in the organization, we're finding a whole lot of dissatisfaction with this -- with -- despite all these reforms that have taken place.

NARLIKAR: So the other bit of inspiration derived from the work of Mancur Olson. Where he talked about -- he wrote about this surprising phenomenon in politics, which he identified as the exploitation of the great by the small.

And for Olsen, this tendency derived from the ability of small players to free-ride, and the larger -- larger players would incur a disproportionate share of the burden of providing public goods.

And I -- as a scholar of international political economy, I study globalization. And I began to notice that we -- we're seeing even more of this possible tendency -- this power reversal, what I called elsewhere the "power paradox," where there is greater power deriving today from globalization for the poor that it's not only from their ability to free-ride.

In fact, we -- for a variety of reasons, including political correctness and well-meaning attempts to correct past-power asymmetries, what we end up is a presumption -- that we accept a presumption of victimhood for any claimant who frames his or her demands in terms of powerlessness.

So, powerlessness and poverty have paradoxically become a weapon -- a double-edged sword, so to speak, in the hands of the poor for their own empowerment, which is a fantastic development; but also a weapon that can be misused and abused.

CHAO: How do you explain Doha's ability to adapt, and be flexible, and sort of accommodate these power shifts?

NARLIKAR: That's an excellent question. I think fundamentally, boils down to decision making processes.

The WTO has a method of decision making which is based on consensus. And as long as no one -- as long as no one disagrees, the decision is taken.

And in the past, this consensus-based decision making used to take place in small groups. So, it was the rich countries, the so-called Quad -- the E.U., U.S., Canada and Japan -- who would get together, build a consensus, and then whatever was agreed in this small group, it would get multi-lateralized. So, the rest of the contracting parties to the GATT would be told, you know, we're agreeing to reduce tariffs on X, and Y, and Z, and you will also get the benefits of it.

There was a possibility for a lot of smaller countries to free-ride, because it was the rich countries saying we're making these concessions, you get the benefits. And they could live with that.

It was also quite difficult if you were a small country to get into this -- into this Quad decision making room -- and it used to be called the "green room." It used to be referred to as green room diplomacy in the rich man's club.

And if you were a small country, not only did you not have access to this green room, but you would be eventually asked in -- with all the other contracting parties present -- present, do you agree? And if you're -- if you're a small country and you're being told, you know, everybody else has agreed, it's very difficult for you to raise your hand alone and block consensus.

And now, in the WTO, about -- since about 2003 or so, things changed very dramatically. Because the WTO attracted a lot of criticism in -- so, you might remember the so-called Battle of Seattle.

I think, you know, there were riots against the WTO. A lot of developing country negotiators protested against the WTO, saying that it was working, but very -- its decision making processes lacked inclusiveness, lacked transparency; that they would not implement decisions that not party to. And so, what's -- so, the changed the system. And these -- even these small group meetings, to so-called high table where you have the Brazils, Indias and the Chinas, but also the E.U. and the U.S. -- these are open-ended meetings; they're not closed-door meetings.

And countries can also self-select. So, they can say this -- this method was really used much more in the case of the Bali Ministerial in (ph) 2013 when -- when the director general, Roberto Azevedo, referred to particular issues that would bring countries together, rather than just countries a priori -- a priori deciding where the big guys are going to get together and make the decisions.

And again, you can compare this with, for example, the U.N. Security Council and its Permanent Five.

CHAO: That's very interesting. I'm wondering belatedly, though, you know, a lot of the criticism of Doha is that, yes, it's taking -- it's a decade late, you know, reaching conclusion. And part of that is the larger powers are sort of fed up with the forum and, you know, there's the tendency to make bilateral decisions. Do you see that as being the case?

NARLIKAR: Absolutely. This is a very, very serious problem, because what we're seeing is really a leadership vacuum in the WTO. And we're just not seeing the U.S. or the E.U. providing the kind of leadership that they used to do in the past in previous rounds which were successful. But one of the reasons why this is happening, really -- or a major reason, in fact, why this is happening, relates to this -- to the argument I made in -- in foreign affairs, which is that the -- the poor have begun to exercise a much greater voice in the system.

The -- and this has two results. The first is that the established powers, the E.U. and the U.S., find it very difficult to reach the kinds of agreements that they were easily able to reach in the rich man's club.

And two, the poor are not in a mood to give in, right? For very long, they have been marginalization, right? Now, for the first time, they're learning to use the system; they have -- they have learned to use the system effectively. So, they are very ready to hold up the negotiations, right? And so, deadlocks are happening partly because the rich countries are not showing enough leadership, but it's also happening because the developing world is much more willing to block the negotiations.

CHAO: Very interesting. And so, in general, if we look at Doha, does trade liberalization benefit the poor and the rich countries in the same way?

NARLIKAR: Yeah, I think -- I think the case with free trade in the way it's being done in the DDA, is fairly straightforward and -- and quite convincing.

So, it does very much benefit the poor countries and it also benefits the rich countries. And because it helps consumers worldwide in rich and poor countries -- it ensures that the benefits of trade liberalization will permeate, not just at the producer level, but the people like you and me as consumers. And so, I think -- I think the case for trade liberalization is fairly straightforward.

But as -- as is the case with whenever you undertake trade liberalization, you have a short-term interim costs, as well. So, I'll give you the example of India. In India, we have a very underperforming agricultural sector. And most negotiators, most Indian negotiators also recognize that this is really not where India's comparative advantage lies. And yet, India finds it very difficult to make any concessions on agriculture in -- in the Doha Round. And it finds itself taking a very defensive position on agriculture, because of the -- of the transition costs that this would entail.

So, if you have -- if you have millions of farmers which are going to be out of job opportunities because you have opened up your agricultural sector to external competition, you have a weak industrial sector, which is the case in India. India's very different from China on this. Where will these poor, illiterate farmers go? How will they live?

When Indian politicians say that if we open our agricultural markets, millions of farmers will die, this -- they are not exaggerating.

So, although reducing the agricultural sector is going to be good for everybody in the medium run, the short-term transition costs are quite difficult to bear politically. And those are the sorts of reasons why it's been difficult to get an agreement on the DDA in terms of substance, even though everyone recognizes there will be gains.

CHAO: I see. And what do you think the rich countries, or the developed countries' responsibility is to make sure that this transition which benefits everyone overall is, you know, that the poor doesn't bear the burden of the transition?

NARLIKAR: There are two answers to this. One, to some extent, because you have other types of problems in poor countries that make it difficult to have a smooth transition. Additionally, what the developed world can do is, one, you can have more aid going out to the poor countries to help with these types of transitions. Two, you can have flexibility mechanisms built into the agreement, which the Trade Facilitation Agreement already has; so, only when a country has the ability to take on certain commitments -- a poor country has the ability to take on certain commitments. Will it then be required to do so?

But above all, in my view, the responsibility of the developed world is to stay engaged in the Doha Round. Because that's not what we're seeing at all right now.

The U.S. and the E.U. are investing all their energies in TTIP. The U.S. is very engaged on TPP and so forth. And this is a real problem if you're a poor country, because the WTO and Doha are institutions instead of negotiations, where the poor have really learned to exercise a voice and where they have alliances, they have allies with other developing countries. And they also have a powerful dispute settlement mechanism that they have recourse to.

If you move trade negotiations outside of the WTO, then the poor do not these same -- they have very few allies; they don't have the same sorts of audiences, which they have in the WTO, which acts as a deterrent against the really crude exercise of power; and they also don't have the same recourse through the dispute settlement mechanism.

CHAO: What do you think is the best example of the way that a developed country will sort of exploit and, as you said, abuse this power of the poor?

NARLIKAR: Yeah, well, I think a very good example is one that Jagdish Bagwati was written about. When we have various world trade unions in developed countries pushing really hard for improved labor standards in poor countries, right, and this has come very much as an agenda to help the poor.

But in fact, that, if labor standards were implemented as rich countries would have the poor implement them, and by the way, a lot of regional agreements do have labor standards, which is yet another reason why developing countries don't like them. But if we were to implement these labor standards in poor countries, those poor countries would really lose their only comparative advantage in some cases.

So, this would be great if you're a rich country, because it would be much easier for you to sell your own products, because you would've out competed the cheaper products that are being produced in the poor countries. And you would've done this very conveniently by acting in the name of the poor.

CHAO: That's very interesting.

NARLIKAR: But another example is trade facilitation, which is a part of the Doha negotiations. And an agreement on this was reached at Bali. Although this is something that will benefit both developed countries and developing countries, developed countries had a real problem getting this agenda through until 2013.

In 2013, they made it an agenda all about development -- and it wasn't really, because many developing countries pointed out that, you know, yes, trade facilitation may be a good thing, but there are many other better things that you could do to help developing countries, such as reducing your agricultural subsidies. Those sorts of things need to be the priority.

But as soon as trade facilitation was couched in development-oriented terms, it became very difficult for developing countries to hold this up. It was framed in terms of development.

CHAO: Interesting.

NARLIKAR: Trade facilitation is a less pernicious example than labor standards, because at least trade facilitation does benefit the rich and the poor countries. But if the developing world had had its way, this would not have been the thing that they would have put high up on the list of priorities.

CHAO: I see. When it comes to labor standards, it seems like such a difficult issue to work around. Because in one respect, if there aren't those type of standards, then the developed countries also be perceived as exploitative. But then in the same way that when they implement these standards, there's a different level of exploitation. So, how does -- how would a developed country work around this kind of irony or paradox?

NARLIKAR: I think probably the best thing that a developed country can do on this is to have aid associated with improving working conditions in poor countries. But that is -- you know, so really, put your -- you know, put your money where your mouth is. Instead of benefit from labor standards yourselves, really deprive developing countries of their comparative advantage.

For example, anecdotally, you have a child working in a poor country. And you impose a labor standard and you say you will not buy any more products based on child labor. That child and a significant chunk of that child's family will starve, right? Because there will -- there will be no transition mechanisms, they will have no alternative jobs and that -- the few products in which they had a comparative advantage, they will lose it because of the labor standard. Whereas if you have better aid mechanisms in place, then you may be able to do something about this.

CHAO: In speaking with the poor countries, is there, or the developing countries, is there a story that you remember in particular in which they were talking about the sort of power of the poor?

NARLIKAR: Yeah, let me give you one -- like, to show you -- just the -- the very long way that developing countries have come in the system. So, in the run-up to the launch of the Doha Round just before 2001, there were many stories of how developing countries did not really want to have a round, they were pressured into having one. And ultimately, they agreed to it because they were promised that this would be a round that would focus on development.

But here's an example of the kind of pressure that developing countries used to have to endure, even as late as early 2001. So, there was a consultation happening, there was a meeting of not all the members. A selection of members, trade negotiators.

And a Central American Republic was saying something that contradicted the way the consensus was going. The consensus as was being pushed for by the developed countries. And this small country was saying, well, actually, we're really not very comfortable about this, because we're very concerned about the costs of implementing the last round; and until these costs are meant -- are met, the costs of implementing the Uruguay Round, we really don't think we should have a new round, taking on any new commitments. And all that we should be doing is talking about how you might help us address our development concerns.

And this trade negotiator was told, the story goes -- which I have heard from several sources, and I quote, "Do you want to be consulted or do you want to be insulted?"

CHAO: Wow.

NARLIKAR: So that's kind of the level of, you know, power machinations...

CHAO: Yes, though I'm not surprised.

NARLIKAR: Brutality of it.

NARLIKAR: That's where thing were then. But now, I don't think any, I mean, I don't think any developed country would dream of taking on -- taking such a flippant and such a -- well, such a rude attitude to developing countries, right? Because what they have learned is developing countries will hold up the negotiations. So, you -- now you get, like, just -- you do get blame games and a lot of insults being traded, but they're more equal terms.

(LAUGHTER)

NARLIKAR: I think it's really sad where the state that we're in right now. Because like you already mentioned, you know, the regionals and the bilaterals, a lot of -- there is a lot disengagement from the developed world with the DDA and that's why they're going away to TTIP and TPP and the multiple other regional agreements that they're signing.

And there's a lot of disillusionment from the developing countries because this was meant to be a development round; it was meant to be completed 10 years ago. So, the mood is really somber.

And I think, you know, I mean, I think the kind of -- we would all be remiss in our responsibilities if we let this slip, because Doha is an amazing opportunity. And the multilateral trading system is really the -- in comparison to all the other systems we've tried and had, multilateralism with all its problems, you know, and it's not the fastest system, is the one that is the most beneficial for the system and for all the players.

I think it's very sad. After all that was achieved in the post-war trading system that we are at this point of, you know, disengagement, disillusionment, even boredom. And somehow, we need to put the va va voom back.